Legislation

SERS was established by Pennsylvania law in 1923. The current State Employees' Retirement Code was enacted in 1974 and continues to govern our operations and the benefits we administer today. As one would expect, however, over nearly a century of operation, new proposals are frequently considered and many laws have been enacted to revise the administrative and benefit-related aspects of our work.

Research

It is typical for members of the General Assembly to introduce at least a handful of SERS-related bills each year. As with most legislation, only a very small number of introduced SERS-related bills make it through the legislative process and are signed into law by the Governor.

You can visit the General Assembly's website to search the content and status of all legislation introduced in Pennsylvania.

The Independent Fiscal Office maintains a searchable database specific to retirement-related legislation. You can find proposals and related documentation concerning Pennsylvania school, state, or municipal retirement systems

SERS Role

Our role is to effectively administer the retirement benefits set forth in Pennsylvania law, as passed by the General Assembly and signed by the Governor. As such, SERS does not take positions on legislation related to the system or level of retirement benefits for state employees. Rather, we assist policymakers by providing data, technical expertise, and information. Similarly, we don't speculate on any particular bill's prospects for enactment.

If a law is enacted, we educate our members about what it means and change our administrative processes or benefit provisions to comply with the law.

Key Laws
Below are high-level summaries of significant components of a number of key laws that have revised the administrative and benefit-related aspects of our work over time. Not all laws are listed nor are all aspects of each presented. This list is for your information only; if you need details, please consult the Pennsylvania Consolidated Statutes or talk with an attorney.


Act 2017-5

On June 12 2017, Governor Tom Wolf signed into law Act 2017-5 that will fundamentally change retirement options for most new hires beginning January 1, 2019. In addition, the legislation allows current members to opt-in to one of the three new options between January 1, 2019, and March 31, 2019. The choice is irrevocable and would go into effect on July 1, 2019.

Key Points for SERS Members:

Special benefit enhancements for current A3/A4 employees:

Lump-Sum Withdrawals: Members will now have the ability to take lump-sum withdrawals of their contributions and interest. This withdrawal will have a greater impact on their remaining annuity.

Shared-Gain: Members' pension contributions to go down when SERS' investment returns exceed return targets. This provision balances the current downside risk-sharing required of A3/A4 members.

Benefit Design
This legislation introduces two new hybrid defined benefit (DB)/defined contribution (DC) options and a straight DC option for SERS (and PSERS). The new classes of service will apply to all State employees - with the exemption of most hazardous duty employees - who first become SERS members on or after January 1, 2019.

Additionally, all current State employees will have an irrevocable option to join one of the new hybrid options or the straight DC plan between January 1, 2019 and March 31, 2019, with an effective July 1, 2019. The newly elected tier or plan would be prospective only and generally apply to all future service.

An overview of the Classes of Service and operative provisions is outlined.

 

Act 2010-120

Reduced retirement benefits for most employees hired on/after January 1, 2011 by reducing the accrual rate to 2%, increasing retirement age to 65, extending vesting period to 10 years, prohibiting the withdrawal of member contributions and interest upon retirement, and other measures. Set most benefit provisions of new legislators at the same levels as rank-and-file employees. Retained employee contribution of 6.25% and created opportunity for employees to "buy up" to a 2.5% multiplier in exchange for a higher employee contribution. Created the possibility that employee contributions could increase in certain circumstances if investments fail to perform as expected and employers meet their payment obligations. Refinanced pension system liabilities and capped growth of employer contribution rate increases.

Act 2003-40

Changed the funding period for most, but not all, of SERS' liabilities from 10 years to 30 years.

Act 2002-38

Provided a two-step cost of living adjustment beginning July 1, 2002 and implemented a 1% minimum employer contribution rate.

Act 2001-9

Increased retirement benefits for employees who became SERS members on/after July 1, 2001 by increasing the accrual rate to 2.5% for rank-and-file employees and 3.0% for legislators; reducing the vesting period to five years; allowing service purchases to be paid by actuarial debt; providing for an adjustment for employees who retire after the age of 70; and other measures. Increased employee contributions to 6.25% for rank-and-file employees and 7.5% for legislators. Allowed then-current members to "buy up" to the higher benefits, applied retroactively, by agreeing to pay the higher employee contribution rate on a going-forward basis.

Act 1998-88

Provided a cost of living adjustment beginning July 1, 1998 to eligible retired members, based on their dates of retirement, up to and including June 30, 1997.

Act 1998-41

Opened a "30 and out" retirement window from July 1, 1998 through June 30, 1999.

Act 1995-77

Limited retirement-covered compensation for new employees to the amount allowed by the IRS effective January 1, 1996.

Act 1994-29

Extended "prudent person" investment authority to the State Employees' Retirement Board; provided cost of living adjustments; extended a then-existing "30 and out" retirement window; permitted attachment of retirement benefits by divorce or support orders; and provided more-favorable treatment of retirees who return to state service.

Act 1991-23

Granted an additional 10% service credit to certain employees retiring in 1991; shifted retirement counseling responsibility from individual employers to SERS.

Act 1987-81

Authorized the State Employees' Retirement Board to establish and manage a voluntary deferred compensation program.

Act 1987-69

Extended a then-existing "30 and out" retirement window.

Act 1984-45

Authorized SERS to invest in venture capital funds and limited partnership and separate accounts.

Act 1982-67

Increased State Employees' Retirement Board from seven to 11 members.

Act 1982-45

Provided for an annual, independent audit of SERS and allowed SERS investments in real estate and up to 50% in stocks.

Act 1978-140

Required forfeiture of future pension and retirement benefits by any SERS member who commits certain crimes that breach the member's duty of faithful and honest public service.